And so it begins…

Great Reset It's Probably Nothing 47 Comments

The biggest shock is not that Canadian housing prices are falling this quickly, but that most people believed that an economy mired in exponentially rising debt could easily withstand a couple of percentage point rises in the rate of interest.

The problem is the price they agreed to pay for the three-bedroom home in March: C$920,000 ($711,000).

By the time their lender got around to appraising the house in May, it marked the value down to C$800,000. A second appraisal a few weeks later was even grimmer — C$740,000.

Legally bound to the deal but no longer able to obtain a big enough loan to go through with it, the couple pleaded with the seller to nudge down the price. On Thursday, they closed at C$810,000. “We didn’t know that the market would crash,” Habibi says.

47 Replies to “And so it begins…”

    1. *
      A buddy of mine sold his old patched onto wood frame, one brick wall
      house situated on a lot that had drainage issues for $515,000. From
      what I’ve seen, (contractors trucks, heavy equipment, etc.) they’ve put
      another couple hundred thousand into it.

      His agent had optimistically listed it at $349,000, but then a bidding
      war erupted. The folks who bought it were retired and wanted to
      be near their grandchildren.

      He’s now looking for a place in PEI.

      Now it looks as though he gets to win at both ends of this thing.

      *

  2. Usually, the deals are contingent on the buyer being able to secure financing…..if the numbers change and the buyer cant get financing, they arent legally bound to do the deal .

      1. In the article it says that buyers were not including the “contingent on financing” in their purchase agreements. I assume that was because the bidding wars for homes became so wild and unhinged from reality.

        $920,000 for a home in the suburbs? Crazy prices. How many mortgages will be underwater in the next year, especially with home equity lines of credit added in to the debt? If the total value of the mortgage plus HELOC exceeds 80% (?), I’m guessing the bank could ask the borrower to immediately pay down the HELOC balance…but how many borrowers will be able to come up with thousands of dollars quickly. They can sell investments in rrsp and tfsa accounts or look at foreclosure and bankruptcy. Both of which cause a new cascade of problems in the Canadian economy. Real estate is not in any way my area of expertise but I did watch the housing crisis in the US play out and it was pretty bad.

    2. Exactly what I thought. Pretty stupid not to put that condition on the offer. The other thing I thought was if a decreased appraisal led to them not being able to secure financing, they were probably buying something that is right at the upper limit of what the bank would give them. Maybe consider living within your means?

      I wonder if they got a variable rate mortgage because that had the lowest payments? In a few months will there be a story about the bank repossessing their home? I suspect going to the bank and asking for a break will be less successful than them going to the seller begging for a reduction…

      1. Reply to Mecheng
        “Maybe consider living within your means?”

        A few neighbor’s in the neighborhood ;
        Mortgaged their Homes
        100 % Buying ‘BITCOINS’. Can’t imagine being Homeless, Setting on the side of a road with a sign that reads;

        *BROTHER can you spare a Bitcon?*

    3. Usually? For the past three years at least, it’s been a sellers market where any conditions on offers would leave you zero chance of being considered. Buyers were making offers well over asking price with no conditions attached.

      1. Yes and it makes it also impossible to sell as you have to buy even before you see the bloody house, makes it very difficult to downsize.

    4. Doug
      that condition needs to be written in, and as the market was so hot, many did not write that in, as it left the the vendor an option out. My friend wrote many contracts with NO conditions, as they would be rejected upon presentation .

    5. Doug Maenpaa ;Oh yes they are…….a real estate agent I know told me a story about this very thing. A couple bought a house after being pre approved and going through a bidding war. Papers were signed , closing date approaching, bank tells buyer you paid too much according to new appraisal. Buyer approaches seller says they can’t get mortgage would he lower price. Seller says no we agreed on price, if you back out I’ll sue you. Buyer gets second mortgage, now buyers are happy in their new home!!

  5. The result of running out of cheap Chinese credit.

    Beijing is done financing the lifestyles of the self-styled elite of Chinada Province.

    The CCP need Russian oil and gas, do not give a tinker’s damn about Chrystia’s bloodfeud with the Moskals and Yids, and do not care to fund the western cause in a war they know the Russians will eventually win.

    Even if it were, part of the deal they had with the Western globalists was that the globalists would only steal the assets of what remained of the blue-eyed bourgeoisie. The seizure of Russian assets finally convinced Beijing it was time to cash out.

    1. Twat
      you idiot, the Canadian housing market has many facets that are not related to anything Chinese. Now stop your stupidity, as it’s fools like you who drive voters away from the conservative side of the aisle .

    2. I doubt beijinj made an active decision to cash out: their own problems are forcing that cash out. If china has to pull in resources from the rest of the world to prevent a crash at home, then look out world. Wonder how that $800K house will feel when this couple is paying 8-10% interest.

      1. Interest will go higher than that.
        Try 18-19 %.
        Shades of the 1979 – 1983 recession courtesy of Carter.
        Billy Beer anyone ?

        1. They don’t have to go anywhere near that, to wreak havoc.

          Rates are almost at that point now. As the yutes and mills have mortgaged 500k to 800k at 1.5% variables originally, going to 6% wrecks their finances. Once they qualified the “stress test”, and get in their new digs, it’s off to the car dealer for new car payments too.

          Those car payments, were the buffer WHEN rates go up.

          This is overdue, the entitled yute class is getting a comeuppance in finances.

      2. How can a lender lend out at 4%, incur expenses and losses here and there, and return some profit at money value destroying 12-15% inflation? You lose 8-12% every year. ( At 12% loss per year, you are wiped out in 8 years. )

  6. Nice to be debt free. We sweated blood to pay ours off as quickly as possible. People until recently would move in to a new house. Get a quarter million heloc and fix up the house to their tastes. Now pay the price boys and girls. Good luck. Btw don’t ever trust the banks. Always willing to give you a loan until, well you will find out.

    1. Bingo Rov …. I never had a new car until my 50th birthday … busy paying off the debt before that. I feel for the folks that are going to get some tough life lessons soon.
      However the government easy money set them up to some extent and that is a shame.

  7. I’ve noticed a slow down in NS as well, properties are sitting on the market if they are high end 900,000 or above. I’m thankful I decided to pay down my mortgage yearly, baby sister made going to the tropics her priority yearly and will spend another ten years paying off her mortgage. I’m debt free, excluding my aging dog that costs me a fortune in happy pills for her anxiety, bug juice monthly to keep the ticks away and her yearly teeth cleaning. For almost two years people were putting in offers well above the asking price with no subject to’s attached. I pity those people if the sewer or water lines go they are going to be unable to fix the problems.

  8. I am subjected to a constant barrage of main stream ‘tell me what to think’ press on my computer. There is no mention of a housing bubble, let alone the side effects of this ‘inflation’ thing. This cannot be an issue. I searched the bought and paid for media for hints or mentions. Nothing.

    I am sure a token few far white acid right extremists will be aware of this issue, and avoid whatever consequences. The majority are, however, flowing along in happy ignorance. You could put that into your plans for the summer.

  9. So I’m going to say that there is a whole lot missing from the article, important things like how big the down payment was, and if they went to a traditional lender or an alternative lender.

    Assuming a 20% down payment($184k), the mortgage would be $736,000. So presumably they would have qualified for that, but the decrease in value of the property would have resulted in them ending up with a high ratio mortgage, and all the insurance fees that go along with it, which probably meant they couldn’t afford the payments any more.

    I’m also curious, because most RE agents won’t even talk to you if you aren’t pre-approved, how much they were pre-approved for, and if they suckered the seller into taking less money

      1. I’ve been paid and now I have a lot of operating cash for winding things up in B. C.

        I still have some of my gear on the property due to the timing of the deal. Now the new owner is starting to behave like an arsole about my not clearing out fast enough for his liking, even though I thought we had a prior understanding as to how long that would take. (Serves me right for not getting those details in writing, eh?)

        Considering the impending collapse of the housing market and the possibility that Prinz Dummkopf might nail the hides of all homeowners to the wall through an extra tax or two, I can’t say I feel sorry for him.

  12. “We didn’t know that the market would crash,” – History has a habit of repeating itself. Learn from history.
    The US 2008 mess was triggered on over the heels debt on housing, people were using their equity as a ATM machine.

    1. Hey McWelfare NB
      2008 was a intentional act, set up to get O’Butthole in the white house. Try keeping up fool. The reason they needed O’Butthole is what you are seeing happening today!

  13. Good. It needs to crash. Too much money out there right now. It needs to disappear. And it is the stupid and the greedy that will be sacrificed. As it should be. Painful yes.

    1. Investors have a saying: “Bulls make money. Bears make money. Pigs get slaughtered.”

      2. Bolton! (Waddya mean Notlob isn’t Bolton backwards? It worked for the guy selling the Norwegian Blue parrot.)

  14. Statistics Canada reports that roughly 70% of Canadians own a residence or live in one as a dependent. Out of the 30% who rent, only 1/2 aspire to own. Do the 70% like to see their investment decline? Do they vote? The 15% of Canadians who want to buy seem to be running the show.

  15. What does everyone think of the Cullen report conclusion that money laundering is not the cause of Vancouver housing inaffordability? There’s 3 possibilities (2 linked somewhat) – foreign ownership, money laundering, and low interest rates. The first two are nor dependent on low interest rates. Seems to me we get to test the BC government conclusion.

    1. Vancouver housing has been unaffordable for decades, long before legal gambling was a thing in BC.
      The launderers and the Chinese mostly stick to the really high-end properties anyway.

  16. Lost numerous deals because I would not remove the finance approval conditions. I was pre approved, but did not trust banks and didn’t want to risk my deposits. Remember -a banker is someone who wants to lend you an umbrella when the sun is shining – they want it back at the first sign of a cloud.

    1. How true how very true neighbour. Never ever trust the banks. I did once, never ever again.

  18. l promised my doggies they would always have a home, and REFUSED
    to sell despite the mkt being what it, well, *was*.
    not………………….1…………………..mg…………………….regret
    -l will realize all l need to live on upon sale anyways, pension and interest on proceeds,
    any less and it just means the local wildlife rehab ctr gets less, because they gettin all the rest either at time of sale or via my estate. (l detest most people for their selfishness)

    and be DAMN CERTAIN folks there WILL be a tax on proceeds soon enough.
    just……………………………keep………………………..voting………………………..LIEberal

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